from the yahoo board - for what it's worth
KGS - UBS Investment Thesis
We view KGS as an organic growth and expansion story, with a positive long-term outlook. In our opinion, the partnership possesses several fundamental strengths, which should support distribution growth of 20-30% and distribution coverage protection of 1.2-1.4x for KGS over the next several years (excluding acquisitions). These fundamental strengths include: 1) strong relationship with Quicksilver Resources, Inc.; 2) strategically located assets in major natural gas producing areas; 3) stable and growing cash flow generation; 4) several organic growth projects to expand its system; and 5) excess capacity providing the opportunity to increase throughput volumes at minimal incremental costs. Overall, as the outlook remains positive and KGS is positioned to benefit from several near-and long-term opportunities, we continue to rate KGS a Buy. Price appreciation to our 12-month price target of $30 (from the May 06, 2008 closing price of $24.98), combined with a 12-month forecast distribution yield of 5.3%, translates into a 25.4% total return potential.